Union Cabinet clears way for IPOs of 11 PSUs

If the government has its way, investors can look forward to more PSU IPOs in the coming years. In its meeting today, the Union Cabinet approved listing of 11 central public sector enterprises. “The Cabinet Committee on Economic Affairs (CCEA) has given its approval for listing of 11 CPSEs (Central Public Sector Enterprises) on stock exchanges,” an official statement said. This includes five PSUs under the railway ministry and four defence companies.

The PSUs under the railway ministry that will launch initial public offerings (IPO) are Rail Vikas Nigam Ltd (RVNL), IRCON International Ltd, Indian Railway Finance Corporation (IRFC) Ltd, Indian Railway Catering and Tourism Corporation (IRCTC) and RiTES Ltd.

Included in the defence basket are Bharat Dynamics Ltd, Garden Reach Shipbuilders & Engineers, Mazagon Dock Shipbuilders Ltd and Mishra Dhatu Nigam Ltd.

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Additionally, MSTC under the administrative control of the steel ministry, and power PSU North Eastern Electric Power Corporation (NEEPCO) have also been cleared by the Cabinet for disinvestment through IPO.

Retail category to get discount in PSU IPOs

“With a view to ensure wider participation by small investors in the CPSEs’ disinvestment programme, a price discount up to 5 per cent on the issue price has also been approved for the retail investors and eligible employees of 11 CPSEs participating in this offer,” added the statement.

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The move is part of the government’s plan to raise INR46,500 crore through minority stake sale and INR15,000 crore from strategic disinvestment. While presenting the union budget for the current year, Finance Minister Arun Jaitley had said IRCTC and several other PSUs will be listed soon.

Several PSU IPOs held despite government clearances

In the government machinery, it can take several years before PSU IPOs materialize. We have a long list of public sector navratnas and miniratnas waiting for IPOs and despite government clearances, something or other keeps holding them up. This list includes Hindustan Aeronautics Ltd (HAL), Pawan Hans and Airport Authority of India (AAI). At the same time, the government plans to bring IPOs of general insurance companies. Out of the several PSUs, only HUDCO and Cochin Shipyard have made progress. While HUDCO is ready to hit the market with its IPO anytime now, Cochin Shipyard has filed draft prospectus for the same.